Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1. Wyrwa Industries issued $2,500,000,8%, 1000 face bonds on July 1, 2019 at a price of 105. The bonds pay interest semi-annually on January 1

image text in transcribed
1. Wyrwa Industries issued $2,500,000,8%, 1000 face bonds on July 1, 2019 at a price of 105. The bonds pay interest semi-annually on January 1 and July 1. The bonds mature in 10 years. Instructions: a. Prepare the journal entries for the following events: issuance of the bonds on July 1, 2019; accrual of the interest and amortization of the premium or discount at December 31, 2019; payment of the interest on January 1, 2020; payment of the interest on July 1, 2020; and retirement of the bonds at maturity in 10 years. b. Show the balance sheet presentation of the bonds payable under long-term liabilities at December 31, 2019. Assume all the facts about the bonds above are the same, except the bond indenture provides that each 1,000 bond is convertible into 40 shares of $4 par value common stock. On July 1, 2021 after the interest was paid, bonds with a face of $1,000,000 and a carrying value of $1,040,000 were converted by investors. The market price per share on the date of conversion was $15. Prepare the journal entry to record this event. 1. Wyrwa Industries issued $2,500,000,8%, 1000 face bonds on July 1, 2019 at a price of 105. The bonds pay interest semi-annually on January 1 and July 1. The bonds mature in 10 years. Instructions: a. Prepare the journal entries for the following events: issuance of the bonds on July 1, 2019; accrual of the interest and amortization of the premium or discount at December 31, 2019; payment of the interest on January 1, 2020; payment of the interest on July 1, 2020; and retirement of the bonds at maturity in 10 years. b. Show the balance sheet presentation of the bonds payable under long-term liabilities at December 31, 2019. Assume all the facts about the bonds above are the same, except the bond indenture provides that each 1,000 bond is convertible into 40 shares of $4 par value common stock. On July 1, 2021 after the interest was paid, bonds with a face of $1,000,000 and a carrying value of $1,040,000 were converted by investors. The market price per share on the date of conversion was $15. Prepare the journal entry to record this event

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Productivity Audit

Authors: Mark Spelman, Paul Spence

1st Edition

1907766073, 978-1907766077

More Books

Students also viewed these Accounting questions

Question

2. What efforts are countries making to reverse the brain drain?

Answered: 1 week ago